1. gpl7811556 IFS (S).pdf1 30/04/201214:22 SmartMoney Independent Financial Services MAY / JUNE 2012Is it time to getmore flexible withyour money?Remove the cap on theretirement income you can takeAre you savingenough now to livewell in years to come?The closer you get to retirement thegreater the need to talk to usPicking the rightbalance of assetsTfor your portfolioPAC TIM ETHE BUDG OUR OF ON YIALKeeping track of lots of individualN ne m lay T IOassets can be a daunting task2201INANCING e ly e N SF ANN th ce t d E N ar tes LM PEWill your loved ones PL ctffeLa O ICes a et? s eget your inheritance?ng R T w adcha r pockEN MA youTOMake sure you avoid unnecessary legalcomplications and emotional hardshipUscA Independent Financial Services (UK) Ltd 404 The Waterfront, Stonehouse Park, Sperry Way, Stonehouse, Glos, GL10 3UT Tel: 01453 797500 Fax: 01453 797559 Email: ifs@theifsgroup.com Web: www.theifsgroup.com Registered in England No. 2937166.Registered Office: 404 The Waterfront, Stonehouse Park, Sperry Way, Stonehouse, Glos., GL10 3UT Independent Financial Services (UK) Ltd is an appointed representative of Lighthouse Advisory Services Limited which is authorised and regulated by the Financial Services Authority.

2. WelcomeRETIREMENTEditorialPension legislation is alwayson the move and keepingup to date with the latestchanges could open upnew opportunities for you inretirement. In April 2011, someof the most significant changes inpension legislation for five yearswere announced. On page 05 wediscuss the main areas to considerwhen planning for the future soyou can achieve your retirementneeds more successfully.Are you saving Picking the right balance ofassets for your portfolio dependsupon your own risk profile. Oneenough now to liveway to protect your portfolio isto spread your risk by diversifyingacross several different types ofwell in years to come?investment funds and classes ofsecurities and localities in order todistribute and control risk. Readthe full article on page 07. In a low gilt yield environment,having flexibility within a pensionThe closer you get to retirementarrangement can make a bigthe greater the need to talk to usdifference. On page 09 we look atoptions that include either delayingRetirement is something we all look forward to and, even if ittaking pension benefits until thesituation improves, or phasingseems a long way off, the crucial question is Do you have enoughmoney into drawdown, to benefit saved for a comfortable retirement?from any potential upturn. A full list of all the articlesWhatever the answer, its not too late toWant to discover whatfeatured in this edition appears on boost your retirement savings. The closerthe future will look like?page 03. nyou get to retiring the greater the need to Even if your pension is up andpreserve your savings and ensure they will last running, thats not the end ofContent of the articles featured in thisall through your retirement. the story. Its important thatpublication is for your general informationWe can help you assess whether you need you review your payments,and use only and is not intended to address to make changes to your investments as youyour particular requirements. They should particularly if you have anot be relied upon in their entirety andapproach retirement. change of circumstances. Ifshall not be deemed to be, or constitute,Investing in non-pension savings will you dont know how youradvice. Although endeavours have been enable you to use these to supplementpensions doing, you cantmade to provide accurate and timelyknow what your future willinformation, there can be no guaranteeyour pension income and still access yourthat such information is accurate as of the money if you need to.look like. To discuss howdate it is received or that it will continue toHaving the right mix of investments will help we could help you plan forbe accurate in the future. No individual oryour savings outpace inflation. retirement, please contact uscompany should act upon such information for further information.without receiving appropriate professional If you are approaching retirement you willadvice after a thorough examination ofgenerally be able to take up to 25 per centA pension is a long-term investment. The fundtheir particular situation. We cannot acceptresponsibility for any loss as a result ofof your pension fund as a tax-free lump value may fluctuate and can go down as wellacts or omissions taken in respect of any sum. This could be used to supplement as up. You may not get back your originalarticles. Thresholds, percentage rates and taxyour retirement income by reinvesting in a investment. Past performance is not an indicationlegislation may change in subsequent FinanceActs. Levels and bases of and reliefs fromflexible investment. of future performance. Tax benefits may vary astaxation are subject to change and their value Wherever you are with your retirementa result of statutory change and their value willdepends on the individual circumstances ofsavings, dont be put off from taking action depend on individual circumstances. Thresholds,the investor. The value of your investmentscan go down as well as up and you may getthere are still steps you could take to boost the percentage rates and tax legislation may change inback less than you invested.income youll get when you retire. n subsequent Finance Acts.02 3. 04 IN THIS ISSUE ss iscu ialo d inanc T fr gyou lanninents p iremIn this issueu tain req to oberor furth on, 06 rmatie infopleast uscconta02Are you saving enoughnow to live well in 08 Automatic pension enrolmentyears to come? Latest delay scarcely made the newsThe closer you get to retirement thegreater the need to talk to us09 Alternatives to help people improve income levels04 11Eradicate any financialValuable planning opportunities in aworries by protectingretirement market where the gilt yieldyour incomehas declinedChoosing the right solutions that aremost relevant to your current lifestyleis the key10 Will your loved ones get your inheritance? Make sure you avoid unnecessary legal05Is it time to get moreflexible with your money? complications and emotional hardshipRemove the cap on the retirementincome you can take 11 The impact of Budget 2012 on your financial planning Howdo the changes affect your pocket?0612What the Chancellorhad to sayCreating a stable economy, a fairer,12 Maximise the lifetime income from your pensionmore efficient and simpler tax systemat retirementand further reforms to support growthWhy shopping around for an annuity could increase your income07Picking the right balance ofassets for your portfolioKeeping track of lots of individualassets can be a daunting task want to make more of your money IN 2012? For more information please tick the appropriate box or boxes below, include your personal details and return this information directly to us. nArranging a financial wealth check Name nBuilding an investment portfolioAddress nGenerating a bigger retirement income nOff-shore investments nTax-efficient investments nFamily protection in the event of premature death nProtection against the loss of regular income nProviding a capital sum if Im diagnosed with serious illnessPostcode nProvision for long-term health careTel. (home) nSchool fees/further education funding nProtecting my estate from inheritance taxTel. (work) nCapital gains tax planning Mobile nCorporation tax/income tax planningEmail nDirector and employee benefit schemes nOther (please specify) You voluntarily choose to provide your personal details. Personal information will be treated as confidential by us and held in accordance with the Data Protection Act. You agree that such personal information may be used to provide you with details and products or services in writing or by telephone or email.03 4. ProtectionEradicate any financial worriesby protecting your incomeChoosing the right solutions that are most relevant to your current lifestyle is the keyMost of us dont like to think about how we would manage ifyour lifestyle? Critical illness insurance can pay out a tax-free cash sum should thewe were ill and unable to work. But its important to sit down insured person be diagnosed with oneand think about the future in this way, if only to give both you of a range of specified critical illnesses while the policy is in force. Critical illnessand your loved ones peace of mind. cover can be either arranged on its own or included as part of other forms ofA little forward planning now could insurance or long-term disability coverinsurance, such as life cover.provide you or your family with a regular but they basically do the same thing. Critical illness polices can vary inincome or cash lump sum at a time whenWhen you buy income protection the illnesses they cover but most coverfinancial worries should be the last thingyou choose how much income you illnesses which are consistent with theon your minds.want to receive. The maximum incomeAssociation of British Insurers list of There are a number of differentis typically up to 65 per cent of your critical illnesses. These include cancer,solutions to choose from. In an ideal earned income. The payments are tax- heart attack and stroke.world wed be able to afford them all.free though, so the shortfall might not You can choose the length of timeBut with so many other everyday financial be as much as you think. you want the policy to run for manyresponsibilities, its better to choose You need to choose when you want the will stop when you reach 70 years ofthe ones that are most relevant to your regular payments to start should you haveage but it could coincide with the endlifestyle now. Then, as your needs change,to make a claim, so you need to includeof your mortgage or children finishingyou can change the type of protection any payments from your employer. Incomeschool or university. nthat you have in place. protection typically pays out until you retireor you recover but you can choose to stopIncome protection matters it earlier, perhaps once a mortgage hasIncome protection insurance is designed been paid off. Payments will also stop if No matter what your financialto provide you with a guaranteed regularyou do go back to work. If you were to fall circumstances are, its usuallybetter to have some protectionincome if youre too ill to work due to ill again you may be able to claim again.insurance in place rather thansickness or injury. You usually continue tonone, and you should increase orreceive this regular income until youre well The critical factor change the type of cover you haveenough to return to work. Youll often find How would you cope financially if you as your financial and personalincome protection referred to as permanentwere suddenly diagnosed with a critical circumstances change. To discusshealth insurance, income replacementillness and what effect would it have onyour options, please contact us.04 5. RetirementIs it time to get moreflexible with your money?Remove the cap on the retirement income you can takePension legislation is always on the move and keeping up to date with the latest changescould open up new opportunities for you in retirement. In April 2011, some of the mostsignificant changes in pension legislation for five years were announced.Gaining more control Another age-restricted benefitA pension is a long-term investment.Many of these changes were designed to where the rules have been eased is The fund value may fluctuate and canlimit what the government clearly sees the opportunity to take tax-free cashgo down as well as up. You may notas over-generous tax relief concessions. typically a quarter of your pension pot get back your original investment. PastBut other changes have created the verywhen you first start to take your pension performance is not an indication of futureappealing prospect, for people agedbenefits. Until April 2011, if you hadnt performance. Tax benefits may vary as a55 or more, of gaining more controltaken your tax-free cash by age 75,result of statutory change and their valueover when and how they can use their you lost the chance to do so. Now thatwill depend on individual circumstances.retirement savings.restriction is removed too. Thresholds, percentage rates and tax Under the current rules, if you meet legislation may change in subsequentcertain eligibility criteria, you can nowPension contractFinance Acts.take as much as you want from your Depending on your circumstances, allpension without the maximum income these changes may well sound like goodrestrictions that apply to conventionalnews, but theres one important thingdrawdown arrangements. To be eligibleto be aware of. Just because the rulesfor this facility known as flexible about when and how you takedrawdown you have to show that youpension benefits havealready have a secure pension income changed, it doesnt meanof 20,000.your pension contract will have changed as well.Enhanced drawdown facilities If the terms of yourWhile, for many people, buying an annuitycontract have not beenis likely to remain the most appropriate updated to reflect the newmethod of accessing their pension income,legislation, you could find that yousome will want to take advantage of thesecant take advantage of them. Youenhanced drawdown facilities.could still find yourself obliged to Flexible drawdown could, forbuy an annuity at age 75. And if youexample, be used to meet one-off large havent taken your tax-free lump sumexpenditure items as they arise or toat that age, you could still lose theoptimise your tax liabilities. It could also opportunity to do so. nbe a way to pass money through thegenerations, either by gifting regularWe help our clients to planfor the future by meetingpayments, for example into trusts, or astheir retirement planning needs.pension contributions to children using For more information aboutnormal expenditure rules so as to helphow we COULD really makeavoid Inheritance Tax.the most of your retirementplanning, please contact usfor further information.Paying income taxIn moving money out of your pensionfund before you die, you will be payingIncome Tax on such payments but at arate that is lower than the 55 per cent taxcharge payable on a lump-sum paymentfrom your pension fund should you die. 05 6. Budget 2012What the Chancellor had to sayCreating a stable economy, a fairer, more efficient andsimpler tax system and further reforms to support growthThe Chancellor of the Exchequer, George Osborne, presented his third Budget speech to Parliament on21 March 2012. It maintained the governments strategy to reduce the deficit, contained far-reaching taxreforms and support for growth and reward for work. The Chancellor set out the actions the governmentwill take in three areas creating a stable economy, a fairer, more efficient and simpler tax system andfurther reforms to support growth.Tax matters Child benefitgifts from a domiciled to a non-domiciledThere was a welcome increase in the Child benefit will now bring a reduced spouse (or civil partner); and for theIncome Tax Personal Allowance for the benefit for those with income of overnon-domiciled spouse to elect to be2013/14 tax year to 9,205, not far off the 50,000 (this is subject to tapering whentreated as domiciled thus allowing fullgovernments stated target of 10,000.the claimant earns over 50,000, with it IHT exemption. However, for the elderly this wasbeing reduced entirely for those with anlargely neutralised or worse by the income over 60,000).Other measuresunexpected abolition of the Age RelatedThe first steps were also taken to limiting Many previously announced measuresPersonal Allowance from 2013/14 for the amount of tax reliefs such as charitable remained unaltered, such as the limits forthose not yet 65, and the freezing of the gifts, losses and loan interest. Fromtax-favoured investments in Enterpriseallowance for those who are.2013/14 the total relief will be limited toInvestment Scheme (EIS) shares (1m Then there was the reduction in the50,000, or 25 per cent of the individualsfrom 6 April 2012) and Venture Capitalhighest rate of Income Tax from 50 perincome, whichever is the greater.Trusts (VCT) shares (200,000 fromcent to 45 per cent from 2013/14. It 6 April 2012), and the IHT thresholdseems likely that taxpayers may wish to Tax avoidance(remaining at 325,000). ndelay income receipts until after 5 April As part of the governments plan to2013, if they are able. introduce further measures against tax Levels of tax benefits are based on current In contrast to the reduction in theavoidance, it was no surprise that theor proposed legislation and may vary as atop rate of Income Tax, there was a headline measure was the new SDLT rateresult of statutory change and their valuefocus on increasing the take from of 15 per cent for residential propertieswill depend on individual circumstances.other taxes, with a number of new acquired for more than 2m by certainmeasures aimed at raising morenon-natural persons (i.e. not individuals).revenue from the wealthy. This applies immediately and it is alsoplanned to introduce an annual chargeResidential propertyfor properties owned by these non-A new higher 7 per cent Stamp Duty Land natural persons, but only from 2013. TheTax (SDLT) rate on properties costing moreChancellor made it clear that attemptsthan 2m was introduced. Also, the UK to circumvent the new rules would bewill now copy many other countries in blocked retrospectively.taxing the gains realised by non-residentson UK property disposals. However,Inheritance Taxthis will (at least initially) not apply to Other welcome measures included aindividuals, and will apply only to gains proposal to increase the Inheritancerealised on residential property. Tax (IHT) threshold from 55,000 forThe Chancellor of the Exchequer, George Osborne06 7. InvestmentPicking the right balance ofassets for your portfolioKeeping track of lots of individual assets can be a daunting taskPicking the right balance of assets for your portfolio depends upon your own risk profile. One way toprotect your portfolio is to spread your risk by diversifying across several different types of investmentfunds and classes of securities and localities in order to distribute and control risk.Different risk characteristicsReduce share-specific offset losses in a portfolio and help toThere are many different assets inrisk by diversifyingachieve better returns over time.which you can invest, each with By diversifying within assets, you candifferent risk characteristics. While the spread your investments into differentInvestments stylesrisks attributable to assets cannot beshares or bonds to ensure yourportfolioto suit your needsavoided, when managed collectively as is exposed to lots of different types ofThis is another important aspect topart of a diversified portfolio, they can investments rather than, for example, consider when building an investmentbe diluted. having shares in just a few large portfolio. Some investment funds use a The main assets available are shares,companies. In this way, share-specificpassive strategy. This is an investmentbonds (also referred to as fixed interest), risk can be reduced should one of those approach that aims to mirror or trackcash and property.companies experience difficulties.the performance of a financial index. While individual assets have a bearing This is normally done by either investingon the overall level of risk you areDifferent sectors perform in the exact constituents of an index orexposed to, the correlation between in very different waysby taking a representative sample ofthe assets has an even greater bearing. It is just as important to spread yourthat index. The managers of such fundsThe aim is to select assets that behave investments across differentsectors areas of have lower expenses than active fundin different ways, the theory being thatthe economy where businesses share the same managers, and the charges to investorswhen one is underperforming, the otheror a related product or service, for example, are therefore lower.is outperforming. pharmaceuticals, telecommunications or retail Other funds use an active approach and Fixed interest investments and property, as well as different companies. Companies aim to beat the index by using their ownfor example, behave differently to share- are classified by the sector in which theyresearch and analysis to select shares theybased investments by offering lower, more reside, which is dependent on the goods orbelieve will achieve greater returns. nconsistent returns. This provides a safety services they sell or provide.net by diversifying away from many of theFor many reasons, companies within No matter what yourrisks associated with reliance upon one different sectors perform in very differentinvestment goals are and how much you wish to invest, weparticular asset. ways. By diversifying across sectors you can work with you to developcan access shares with high growth the best portfolio for you. ToSpreading investments expectations without over-exposing yourdiscuss your wealth creationacross different assets portfolio as a whole to undue risk.objectives, please contact us.Keeping track of lots of individualassets can be a daunting task. AGreater geographical This information sets out the basics ofmuch simpler solution is to acquire diversification can help portfolio diversification. It is not designedinvestment funds containing those Its natural to feel more comfortableto be investment advice and should notassets and leave the diversificationinvesting a portfolio in your home be interpreted as such. Other factors willworries to professional management. Bymarket but this is not necessarilyneed to be taken into account beforepurchasing a fund that invests in, say, the most sensible option. Because making an investment decision. The value oflarge blue chip companies, another that investments in different geographical investments and the income from them caninvests in smaller growth companies economies generally operate in differentfall as well as rise and is not guaranteed.and others that invest overseas, youeconomic cycles, they have less thanYou may not get back the amount originallycan spread investments across hundredsperfect correlation. Thats why greater invested. Past performance is not a guide toof different assets.geographical diversification can help to future performance 07 8. RetirementAutomatic pension enrolmentLatest delay scarcely made the newsReforms designed to get more people saving for retirement have For firms with fewer than 50 employees,been pushed back so many times that the latest delay scarcely these deadlines fall between June 2015and April 2017, unless whoever wins themade the news. It will now be October 2018 before minimumintervening general election offers them aemployer contributions to workplace pensions are fully phased in. further reprieve.Previously, this was supposed to happen by October 2017 andAny employer setting up business betweenbefore that by 2016, and before that by 2015. 1 April 2012 and 30 September 2017 willhave auto enrolment dates between 1 MayContributions less affordableSmaller employers2017 and 1 February 2018. nThe government says it is taking thingsProgressively smaller employers willmore slowly because economic conditionsthen be brought on board month byhave made contributions less affordable.Nonetheless, the Department for Work and month until February 2014, when all employers with 250 or more staff will 8,105*Pensions (DWP) insists it will adhere to the be within scope. Firms with 250 to Employees earning at leastlatest timetable regardless of whether the 2,999 people on the payroll will notthis amount annually will beeconomy improves.now get extra breathing space, as hadautomatically enrolled into a pension been hinted in November. scheme with employer contributionsEmployer obligationsEmployers with between 50 and 249 if they are aged between 22 andUnder the new laws, employees will bestaff will have compliance dates rangingthe state pension age, and are notautomatically enrolled into a pensionfrom April 2014 to April 2015.already in a scheme that meetsscheme with employer contributions ifthey are aged between 22 and the state8%minimum standardspension age, earn at least 8,105* a Eventually, theyear and are not already in a scheme thatautomatic level ofmeets minimum standards. Once enrolled,contributions must beemployees can opt out. But saving in aat least this percentagepension will be the new default setting for of the individualsanyone who does not express a choice. qualifying earnings Eventually, the automatic level ofcontributions must be at least 8 per centof the individuals qualifying earnings.This includes 3 per cent that must comefrom the employer. Qualifying earningsalso include payments like overtime andcommission, not just salary.Definitions of payEmployers can set higher contributionrates if they prefer. They will also havethe option of basing contributions onmore straightforward definitions ofpay, which would usually increase theamount due. If you are not already in a workplacepension scheme, when you will beenrolled depends on how many peopleare in your employers Pay-As-You-Earn tax arrangement. The automaticenrolment regime applies to the verylargest employers from October 2012.08 9. WEALTH PRESERVATIONAlternativesto help peopleimprove income levelsValuable planning opportunities in a retirementmarket where the gilt yield has declinedIn a low gilt yield environment, having flexibility within a pension arrangement can makea big difference. Options include either delaying taking pension benefits until the situationimproves, or phasing money into drawdown, to benefit from any potential upturn.Immediate income needsincome level should apply to the entirearrangements and pension annuities.Alternatively, some people may choose todrawdown fund, not just the additionalThe cap on the maximum amount ofuse other savings as a means of providing amount drip-fed in, making it an attractiveincome someone can withdraw from theirfor their immediate income needs, delayingsolution in todays investment market. pension can be a cause of real frustration forthe use of pension savings until later. UsingCare should be taken when considering many people. However, there are alternativesother savings first, such as Individual Savings this type of retirement income planning. Ifto help people improve their income levels. nAccounts (ISAs), leaves the pension fundadditional money is drip-fed into incomeuntouched and available for drawdown as drawdown when conditions are not favourable, Its crucial to find out how youand when the situation improves.for example, when gilt rates or investment can afford the retirement you want. If youre approachingThe changes made to the incomemarkets have fallen further, it may have a retirement, it may be time to thinkdrawdown rules in April 2011 means that negative impact on maximum income levels.hard about turning your pensionmore people can delay accessing theirfund into an income for life. Ifpension benefits as they no longer have Option of annual reviews youre already retired, thereto buy an annuity by age 75, which mayKeeping some pension money back is a could still be things you can do to help boost your income. Tohelp to provide greater flexibility at a time particularly good tactic for those who have discuss the options available towhen people need it.a pension contract that does not allow you, please contact us.them the option of annual reviews. If theyPhasing of moneyonly offer the statutory three-year review A pension is a long-term investment.Another consideration is the phasing of period, then people could have to wait aThe fund value may fluctuate and canmoney into drawdown, to benefit fromlong time before they can benefit from anygo down as well as up. You may notany potential upturn of both investment improvement in market conditions.get back your original investment. Pastmarkets and gilt yields. By keeping some performance is not an indication of futurepension money back, and drip-feeding it Planning opportunities performance. Tax benefits may vary as ain when stock markets and/or gilt yieldsThese kinds of planning opportunities may result of statutory change and their valueimprove, could mean creating a higher be particularly valuable in a retirement will depend on individual circumstances.income level while inside a three-yearmarket where the gilt yield has declined,Thresholds, percentage rates and taxreview period. If the pension scheme is impacting the maximum incomelegislation may change in subsequentstructured in the right way the higheravailable from both income withdrawalFinance Acts. 09 10. Estate preservation 61% The percentage of British adults whodont currently 31% The percentage ofhave a will*people currentlydrawn up without a will whoWill your loved ones claim the main reason is that they justhavent got round todoing it yetget your inheritance? 78%The percentageMake sure you avoid unnecessary legalof people without a will who live ascomplications and emotional hardshipmarriedDespite being a fundamental piece of family financial planning, six out of ten (61 per cent)of British adults dont currently have a will* drawn up, according to research by Standard Life.The research reveals that this becomesIf one of them were to die, the moneymight take some time to think through,even more worrying when looking atcould be passed on to their parents or a finalising a will is not an arduous processthe figures of those with children in the family member before their partner. This and can be done quickly. And also, whilehousehold and also by age.can, of course, lead to unnecessary legalsome might not believe they have anyPeople with no children (41 per cent) incomplications and financial hardship thatsubstantial assets to pass on, its importantthe household are more likely to currentlycould easily be avoided. Therefore a large to remember that having a will in place ishave a will in place than those withproportion of this group really needs to about peace of mind and confidence inchildren at home (27 per cent). review their circumstances and prioritisehaving your affairs in order. nthe value of having a will to protect theirCurrently without a willpartner and any children they might also Can we help?Looking at the age breakdown, more than have in the relationship.two-thirds (77 per cent) of 35 to 44-year-olds Benjamin Franklin once said thatdont have a will in place, more than half (56NO SUBSTANTIAL ASSETSnothing is certain but death andper cent) of 45 to 54-year-olds, two-fifths (42 The research reveals that three out of ten taxes and they are intrinsically linked. Obtaining the right adviceper cent) of 55 to 64-year-olds and almost a(31 per cent) of those currently without can have lasting consequencesquarter (24 per cent) of those 65 and overa will claim the main reason is that theyfor you and your family. Toare currently without a will. just havent got round to doing it yet. This discuss how we could help you Creating a will can be seen as a difficult figure is consistent for those aged 65 and find the right wealth structureand uncomfortable thing to do. Theover, with 30 per cent stating they haventor combination of structures, please contact us.modern family can be complicated, were got round to creating a will.all rushed off our feet and we dont reallyThe next most frequently stated reasonslike to think about death. But the realityare that people dont think they have any The Financial Services Authority doesis if you were to die without a will thesubstantial assets or that they are too not regulate taxation, trust advice oremotional strain on your family, friendsyoung (both 17 per cent), followed by one will writing.and loved ones could far outweigh the in ten (10 per cent) who simply haventtime and money spent in sorting out yourthought about it. The percentage of those *By will, the research means a legallywill in advance.who felt it was too expensive to have a will executed document that explains how andprepared was very low at only 7 per cent. to whom a person would like his or herUnnecessary legalproperty distributed after death.complications Peoples prioritiesThe fact that the number of peopleAs the research proves, the vast majority All figures, unless otherwise stated, arewithout a will who live as married is soof people currently without a will arent from YouGov Plc. Total sample size washigh (78 per cent) is alarming. Couples concerned about the cost of creating 2,051 adults. Fieldwork was undertakenwho arent married or in a registered Civil a will. However, the fact that theyrebetween 8-10 February 2012. The surveyPartnership do not have the same legalusing lack of time as an excuse shows awas carried out online. The figures haveprotection as married couples if they die real sense of peoples priorities. Though been weighted and are representative ofwithout a will in place.the decisions that need to be madeall UK adults (aged 18+).10 11. Budget 2012 101,000The number of filed taxThe impact of Budget 2012 returns in 2009/10 which includeddiscretionarytrustson your financial planningHowdo the changes affect your pocket?Change to retirement ageThis tax incentive encourages many to Extension to IHT spouseThe Chancellor confirmed in Budget 2012 make the most of pension contributionsexemption for Europeanthat he would increase the state pensionnow, so they can make the most of their domiciled spouseage and that we should brace ourselvesretirement in the future. A consultation review of the restrictionfor having to work much longer in the on the spouse/civil partner exemptionfuture. There are already two increases toNo change on GAD maximumwas announced. In the last few years,the state pension age scheduled for 2019The government did not make changes EU law has had an increasing impact onand 2026. If after 2026 the state pension to the drawdown Government ActuarysUK Inheritance Tax (IHT). IHT reliefs andage increases in line with our changing Department (GAD) maximum. Peopleexemptions for agricultural property andlife expectancy, we could expect that starting drawdown or who have reviewedcharities have been extended to coversomeone who is currently 37 wont beit during the last year may have hadthe European Economic Area in 2009 andable to start drawing their state pension their income affected by falling gilt 2010. The announcement is good newsuntil they are 70 and someone who isyields caused by the Bank of Englandfor those whose spouse/civil partner is21 wont receive it until they are 75.quantitative easing programme. At the from another country, meaning they are This means that children born in 2012same time annuities have also experienced domiciled there rather than in the UK. Itare unlikely to get their state pension until a similar impact, but to a lesser degreeshould remove a tax worry and layer ofage 80, if life expectancy at retirementas they are backed by a mix of corporateIHT complexity for mobile people withrises in line with the last 30 years. This is bonds and gilts.international connections.a considerable change for everyone, butwomen in particular have to make a bigGovernment ends salaryChanges topsychological adjustment as their state sacrifice to fund employeesdiscretionary trustspension age is leaping forward. spouses pensionOne of the most complex elements of The two increases already plannedThe government announced the cessationIHT, the ten-year charge and exit chargefor 2019 and 2026 will be followed by of salary sacrifice to fund an employees calculations for IHT in discretionary trusts,increases every five years thereafter. If you spouses pension. This tax idea involvedis to be simplified. This could be goodare thinking this wont really affect me,an employee sacrificing salary or bonus news for trustees and beneficiaries of theseIm still going to aim to retire at 60 or 65and their employer paying this into the trusts, of which there are thousands in theanyway, unless all of us save a lot harder,employees spouses pension up to the UK. HM Revenue & Customs statistics showmany people could still be working well annual allowance, including carry-forward.that 101,000 of these types of trust wereinto their seventies. included in tax returns filed in 2009/10. nIntroduction of a generalPensions tax relief anti-avoidance rule (GAAR)To find out how BudgetThe Chancellor did not make a changeThe direction of travel towards a more2012 may have impactedto tax relief on pension contributions. limited form of GAAR was set out in on your financial plans,This valuable incentive encourages more the Aaronson Report in November please contact us topeople to save for their retirement years.last year. Those endorsing sensible tax review your situation.Tax relief on qualifying contributionsplanning should have nothing to fearinto private pensions means that a 100 if the recommendations in that report, Laws and tax rules may change in theinvestment made by a basic rate tax payer which target schemes that are artificial or future. Information is based on ouris automatically topped up to 125. And contrived, are implemented. Individualsunderstanding in March 2012. Yourif you are a higher rate tax payer you canimplementing tried and tested routes to personal circumstances also have anstill claim the higher rate tax rebate too. mitigate UK tax should not be affected.impact on tax treatment. 11 12. RetirementMaximise the lifetimeincome from yourpension at retirementWhy shopping around for an annuity could increase your incomeThousands of people could end up with biggerpensions as new rules will force insurers toinform customers about better annuity options.The Association of British Insurers (ABI) newcode of conduct forces insurers to give moreinformation about how consumers can shoparound for a better deal, while ensuring thatthose with health problems receive a higherincome as a result.Buying the wrong type of annuityCurrently, according to the ABI, more than half of all investorswho buy an annuity which pays a fixed income for life simply buy the default annuity deal from their current pensionprovider. As a result many end up buying the wrong type ofannuity or effectively locking into an uncompetitive pensiondeal for the rest of their lives. Shopping around for the bestannuity deal could increase the size of a pension by overa third. A recent report from the National Association ofPension Funds claimed that this was costing pensioners morethan 1bn in lost retirement income.Benefits of shopping aroundThe new rules stop insurers from including an applicationform in the information pack sent to customersapproaching retirement, making it less likely that peoplewill simply buy the first annuity they see. These retirementpacks have been redesigned to place greater emphasis onthe benefits of shopping around. Crucially, where insurersare selling an annuity to one of their existing customers,they will be required to ask about their circumstances and Need help to shop aroundmedical conditions before providing a quote. n for the best annuity deal? If you are approaching retirement it isA pension is a long-term investment. The fund value mayessential that you receive the best possiblefluctuate and can go down as well as up. You may not get advice when buying an annuity. To get theback your original investment. Past performance is not anmost out of your pension savings fund youindication of future performance. Tax benefits may vary as should be confident that you are making the right decisions about your retirementa result of statutory change and their value will depend onincome. To discuss how we could help you,individual circumstances. Thresholds, percentage rates and please contact us for further information.tax legislation may change in subsequent Finance Acts.Published by Goldmine Media Limited,Prudence Place, Luton, Bedfordshire, LU2 9PEArticles are copyright protected by Goldmine Media Limited 2012.Unauthorised duplication or distribution is strictly forbidden.